Correlation Between FTAI Aviation and Hertz Global

Can any of the company-specific risk be diversified away by investing in both FTAI Aviation and Hertz Global at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining FTAI Aviation and Hertz Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FTAI Aviation Ltd and Hertz Global Hldgs, you can compare the effects of market volatilities on FTAI Aviation and Hertz Global and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in FTAI Aviation with a short position of Hertz Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of FTAI Aviation and Hertz Global.

Diversification Opportunities for FTAI Aviation and Hertz Global

0.5

Correlation Coefficient

FTAI Aviation  Hertz Global

Very weak diversification

The 3 months correlation between FTAI and Hertz is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding FTAI Aviation Ltd and Hertz Global Hldgs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hertz Global Hldgs and FTAI Aviation is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on FTAI Aviation Ltd are associated (or correlated) with Hertz Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hertz Global Hldgs has no effect on the direction of FTAI Aviation i.e., FTAI Aviation and Hertz Global go up and down completely randomly.

Pair Corralation between FTAI Aviation and Hertz Global

Assuming the 90 days horizon FTAI Aviation Ltd is expected to generate 0.21 times more return on investment than Hertz Global. However, FTAI Aviation Ltd is 4.82 times less risky than Hertz Global. It trades about 0.02 of its potential returns per unit of risk. Hertz Global Hldgs is currently generating about 0.0 per unit of risk. If you would invest  2,505  in FTAI Aviation Ltd on October 25, 2024 and sell it today you would earn a total of  32.00  from holding FTAI Aviation Ltd or generate 1.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.19%
Values	Daily Returns

FTAI Aviation Ltd  vs.  Hertz Global Hldgs

FTAI Aviation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FTAI Aviation Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, FTAI Aviation is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Hertz Global Hldgs

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hertz Global Hldgs are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Hertz Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FTAI Aviation and Hertz Global

The main advantage of trading using opposite FTAI Aviation and Hertz Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTAI Aviation position performs unexpectedly, Hertz Global can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Hertz Global will offset losses from the drop in Hertz Global's long position.

The idea behind FTAI Aviation Ltd and Hertz Global Hldgs pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.